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An anonymous reader writes "After months of hype riding the coattails of the MegaUpload controversy, Kim Dotcom's new cloud storage site, Mega, is finally going live. After being available to early adopters briefly, it's now open to the public with 50GB of free storage and end-to-end encryption. Several outlets have posted early hands-on reports for the service, including Ars Technica and The Next Web. In an interview, Dotcom spoke about how Mega's encryption scheme benefits both the users and the company: 'The Mega business plan will be a distributed model, with hundreds of companies large and small, around the world, hosting files. A hosting company can be huge or it can own just two or three servers Dotcom says—just as long as it's located outside the U.S. "Each file will be kept with at least two different hosters, [in] at least two different locations," said Dotcom. "That's a great added benefit for us because you can work with the smallest, most unreliable [hosting] companies. It doesn't matter because they can't do anything with that data." More than 1000 hosts answered a request for expressions of interest on the Mega home page. Dotcom says several hundred will be active partners within months.' On top of that, the way it's designed will protect Mega from legal problems: 'It's all about the plausible deniability. Mega doesn't know what you're uploading. ... Mega isn't so much securing your files for you as it is securing itself from your files. If Mega just takes down all the DMCAed links, it will have a 100 percent copyrighted material takedown record as far as its own knowledge is concerned. It literally can't know about cases that aren't actively pointed out to it, complete with file decryption keys.'"

So, basically, he's taken the "Swiss Bank Account" model that allows tyrants, dictators, and thieves to keep their money hidden and applied it to uploading illegal content. One major problem with KimDotcom's new model is the fact that Megaupload used to allow users to search for content (read: mostly copyrighted, illegally uploaded content). The search functionality is broken with the new model because your average user can't know the encryption key. This means most users will ignore megaupload and they will suffer from a lack of users. (Because, let's face it: the real reason Megaupload was *ever* popular was as a conduit for piracy. Kim Dotcom knows this, which is what his new move is about: enabling the piracy that makes his site popular, but trying to evade legal liability.)

Of course they don't. But you could. There are differences, but basically this is the value proposition they are offering.

I might make sense for some people, because, for example, you can't stuff 6 dvds in a smartphone. But for others, putting your stuff on a dvd is as good as putting it in the cloud. Perhaps more so, since you have control of it, and it not subject to legal scrutiny unless the police raid your house.

They mention in their TOS that they retain the right to delete duplicate files when more than one user uploads exactly the same file, which is sensible of course. But can anyone tell me how they can do this if they don't have the encryption key?

The legal system doesn't fall for these lame attempts at "hack the law". They've been dealing with creative interpretations, weasel-wording, finding-of-loopholes and everything else we techies think we're masters of for more than two milennia. Ourt "brilliant hacks" are barely worth a yawn in the area of law.

GP is completely right. A judge will look at this and basically say "dude, seriously?". The prosecution will have to prove its case, sure. But Kim and most techies think that's a problem of mathematics, and by adding a tiny variable of unknown value to the equation, they can make it impossible to solve.

But that's not how the law works. At all.

Disclaimer: I'm a techie, not a lawyer. But through business I've had more then ample contact with the legal system, including many court cases.

megaupload lets you share individual files or folders with others while still keeping the contents hidden from megaupload. SpiderOak uses one encryption key for everything, which only you hold and gives only you access to your data.

SpiderOak is zero-knowledge encrypted cloud backup/storage/remote disk, MegaUpload is a an encrypted Dropbox/fileshare/(future)collaboration tool. They occupy slightly different application spaces.

Keep in mind that if they monitor the bandwidth used by the endusers, they'll know they're getting something. After all, using massive amounts of bandwidth that's not coming from Netflix/Redbox/Youtube means you're moving something, and in today's climate in the US, that means copyrighted files, especially if the origination point is obscured. Not quite a smoking gun, but with enough campaign contributions, possibly enough to get a warrant from a media-friendly judge...